Shouldn't Maori.Nat.Other trade at the same price as PM.Labour + PM.Other? Maori.Nat.Other pays off in the case that the government isn't headed by National; PM.Labour + PM.Other span the space of non-National heads of government. Those prices were out of step with each other for a good chunk of the day: an arbitrage worth keeping an eye on.
Current prices in other markets suggest the right price in the PM.National market is about $0.74. I've now set this up in a handy Excel sheet with a reasonable implementation of Sainte-Laguë to back out list seats from prices in the VOTE.XXX markets. It then puts in overhang and accounts for configurations of Parliament where each of ACT and New Zealand First can either succeed or fail in returning to Parliament.
Here's how things currently are looking in the most likely case:
ACT 4
NAT 58
UF 1
MAO 6
NZ1 -
LAB 43
GRN 10
PRG 1
In that case (where ACT returns to Parliament but NZ First does not), if the Maori Party sides with Labour, we have a 64% chance of a National-led coalition; that rises to 87% if Maori supports National or abstains.
I'm happy to upload the .xls file after the weekend if anyone's interested in playing around with it. It's currently 20MB though because of the S-L tables.
Unfortunately, I'm rather beginning to think that the PM markets are far more reliable than the underlying VS markets and that the better approach would be to work backwards from the PM markets to what prices would need to be in the other markets. As 13 different prices go into working out the PM price, it would more than a little difficult to figure out how much each of those would need to be tweaked if working the process in reverse.
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2 comments:
I'd be interested in looking at the spreadsheet.
I also think you're right in questioning the accuracy of the VS markets, trades seem to be few and far between. I for one find them hard to make much money out of, the volatility is low and prices are unlikely to deviate far from the actual outcomes. This makes the binomial stocks much more interesting, how you would work backwards from the PM markets I don't know but good luck.
I'll upload it on Monday.
In other news, the highest price on Obama on ANY of the other exchanges is $0.865. The IEM's at $0.84; InTrade is at $0.84; Betfair's at $0.865. We're about 5 cents higher than the other exchanges.
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